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IRA CHARITABLE ROLLOVER MADE PERMANENT

On a one year basis beginning in 2006, Congress has allowed taxpayers age 70½ or older to make a direct transfer of IRA assets to an eligible charity. This IRA charitable rollover is now permanent as a result of the "Protecting Americans from Tax Hikes Act of 2015" signed into law on December 18, 2015 by President Obama.

This Act is significant because it allows taxpayers to exclude from gross income up to $100,000 each year that is directly transferred from an IRA to an eligible charity. Without the legislation, the $100,000 would be includable in gross income but would not necessarily be offset by a charitable deduction. For example, the two-thirds of taxpayers who do not itemize cannot claim a charitable deduction. For taxpayers who do itemize, there are limitations to what a donor can claim as a charitable deduction: 50% of adjusted gross income for gifts of cash, and 30% of adjusted gross income for gifts of securities. Further, the total of all itemized deductions, including items such as mortgage interest, taxes and charitable gifts, may be limited due to the size of the adjusted gross income.

Ask your tax advisor how the IRA charitable rollover works for you.

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